1. You don't have to do anything special with APFS encrypted clones. It's easiest to copy unencrypted, boot from the backup and turn encryption on, but you can also format as encrypted and Smart Update to it.

2. You wouldn't, since it's not an issue with APFS.

3. Yes, format as encrypted with your own passphrase before copying...with Smart Update. I believe that will work. It certainly won't make it *unencrypted* (don't erase!).